Results of our most recent survey of district businessmen and bankers show further advances in business activity during the past month. A majority of the manufacturing respondents reported increases in shipments, backlogs, and new orders. Inventory levels declined and are at somewhat lower-than-desired levels given current sales prospects. Loan demand continues at a very high level. In particular, banks appear to be experiencing a brisk demand for business loans. Survey results and other contacts with district businessmen indicate that a high level of optimism concerning the economic outlook prevails.

Responses from manufacturers indicate that the district economy continues to advance at the robust pace evident in recent months. Substantial gains in shipments, new orders, and backlogs were reported by survey respondents. The level of optimism among manufacturing respondents concerning the general economic outlook appears to be quite high.

Manufacturing inventory levels reportedly declined further since the last survey, and for the first time in several months inventories were reported to be at somewhat lower-than-desired levels. Retail respondents indicated that inventory levels were in line with sales prospects. Most manufacturing respondents believe that current plant and equipment capacity is inadequate in view of sales prospects.

The level of employment in the district continued at recent high levels, with a slight increase over last month. Reports from most areas of the district indicate that the labor situation remains very tight. Both trade and service and manufacturing respondents reported an increase in hours worked per week. New plants locating in the district continue to be a major factor providing employment. In Virginia, for example, plans for 28 new plants employing a total of approximately 3,000 people were announced during the first quarter of 1973. Labor unrest and stricter federal health and safety requirements have adversely affected employment and output in district coal mining. Wage and price increases were widespread, with more than one-third of manufacturing and trade and service respondents reporting increases.

Respondents from all areas of the district reported increases in retail sales. More than 50 percent of the banking respondents indicated that retail sales had increased in their areas, and all retail respondents indicated that sales were up.

Business and consumer loan demand is especially strong in the district, with more than one-half of the banking respondents reporting increases in these items. Increases in the demand for mortgage loans were also reported, but the demand for this type of loan does not appear to be as strong as that for business and consumer loans. Even so, more than one-third of the banking respondents reported that residential construction had increased in their areas. Activity in nonresidential construction also remains brisk.

Farm real estate values per acre jumped 12 percent during the year ending November 1, 1972, scoring the sharpest advance since 1951. Higher farm prices and delayed marketings of many 1972 crops combined to bring about a 25 percent increase in January-February cash receipts from farm marketings.

Businessmen and bankers remain optimistic about the general economic outlook. More than one-half of the banking respondents expect improvement in business conditions in their areas in the next two or three months.